Things to Watch on the Economic Calendar

Payrolls roll around again, and the data will be picked over for weather effects. But before that, economy-watchers will want to look at new business surveys, a measure of household wealth, and the Federal Reserve’s anecdotal report on economic activity. Some details worth combing over:

Bead-draped revelers will be shouting “Laissez les bons temps rouler” during next week’s Mardi Gras celebrations. Did the good times roll through the February labor markets? Economists are being cautious in their forecasts after two disappointing jobs reports. They expect Friday’s employment report to show nonfarm payrolls up to rise modestly, by around 160,000-175,000 in February.

One data series to look at is the change in jobs as reported by households. The Labor Department surveys households on the employment status of each working-age member and uses the data to calculate the unemployment rate and the labor-force participation rate. In January, households reported an employment increase of more than 600,000 in January. That over sized gain — larger than the number of people joining the labor force — was a key reason why the January unemployment rate fell to 6.6%.

Another data series worth watching: the number of employees working part-time for economic reason. While chatting with the Senate Thursday, new Federal Reserve chairwoman Janet Yellen mentioned this category as one measure of the health of the labor markets. After peaking at nearly 9.2 million early in the recovery, the number of involuntary part-timers fell to below 7.3 million in January. While a short-run increase won’t change Fed thinking, further reduction in the number of involuntary part-timers would further ensure tapering stays on track.

As for weather, the Labor Department tracks the number of people who could not get to work because of weather. Expect the number to jump (although probably not to the 1.03 million snowed-in workers reported in February 2010, the highest February number on record.) But as long as their employers paid them for just one hour of work during the survey period, those workers will show up in the establishment survey that tracks nonfarm payrolls.

A few regional factory reports as well as the “flash” service-provider survey from data provider Markit have mentioned weather as a drag on February economic activity. That icy hindrance may pop up again in the widely followed reports from the Institute for Supply Management scheduled for release next week.

Economists expected the ISM to report a pickup among manufacturers (report scheduled for Monday) and little change in the non-manufacturing sector (out Wednesday).

Financial markets react poorly to a negative miss in the ISM data. For example, a month ago, the ISM said weather contributed to weaker-than-expected January factory numbers. That disappointing report triggered a sharp sell-off in the equity markets on February 3.

A number of comments from the panel cite adverse weather conditions as a factor negatively impacting their businesses in January

Fed chairwoman Janet Yellen told the Senate on Thursday that weather is making it difficult to interpret the present state of the economy. The Fed’s own Beige Book, to be released Wednesday, may offer more insight into current business activity.

The book is a compilation of anecdotes and talks with business contacts in each Fed region. The book focuses on supports to the economy, such as hiring, factory output, and tourism activity, as well as inflation factors, such as wage growth and pricing power among businesses. But this time, the impact of weather may be a major focus of the reporting.

The book is prepared in advance of the March 18-19 Federal Open Market Committee meeting.

On Thursday, the Fed will release the Financial Accounts of the U.S. (also called the Flow of Funds by economy-watchers who still refer to the Fed’s “Semiannual Monetary Report” to Congress as “Humphrey-Hawkins.”)

The report will offer details on the financial health of the various sectors of the economy and the growth in borrowing in the fourth quarter.

To glean insight into the consumer outlook, look at the household balance sheet. Household net worth cratered during the financial crisis, but has since recovered. The report will show how much rising stock prices and increasing home values further boosted household net worth in the fourth quarter.

Next Friday’s main focus will be payrolls, but don’t ignore the consumer credit report out later that day. After years of shunning plastic, consumers are pulling out the credit cards again. Revolving credit—which includes credit cards—increased a large $5 billion in December, accord to Fed data. It was the third consecutive increase in revolving debt. During those three months ended in December, the increase in revolving borrowing was the largest since early 2008 before the financial crisis.

The January data will be released next Friday afternoon. How revolving debt performed is worth noting. Another big gain could be interpreted in two—but opposite–ways.

The glass-half-full reasoning says household finances are in good enough shape to allow consumers to borrow again. That’s a positive development for future consumer spending.

The glass-half-empty explanation is that households, who have not seen paychecks increase by much in this recovery, are turning to borrowing to make ends meet during a time of soaring heating bills. If that’s the case, future consumer spending will have to adjust downward to accommodate higher debt payments.

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